Most Americans can't afford a $1,000 expense

[lektrode]

Re: Most Americans can't afford a $1,000 expense

it really does get down to how people fritter away/waste the money they DO have; show me someone who stops at a 7-11 more than once or twice a month and i'll show you someone who cant come up with 1000bux (in cash, immediately,today) if their lives depended upon it without resorting to pawn/payday loansharks

[lektrode]

Re: Most Americans can't afford a $1,000 expense

front page of the Sunday Boston Globe:

....For example, the inflation-adjusted median income of affluent families in Greater Boston has grown 54 percent since 1979, to $230,000 from $150,000 a year, largely due to high-paying technology jobs.

....

would offer this is due not so much to hi-tech, but to the FIRE economy having bestowed large salary/bonuses on the inhabitants of the offices in downtown beantown's finance district - vs the outskirts along 128/495, where most of the hi-tech jobs actually are - i'd suspect that damn few in those areas make anywhere near 150k, never mind 230....

but west of worcester?
heh - farms, fields, abandoned mills and huge estates... well, once you get away from amherst and the tenured crowd...

[aaron]

Re: Most Americans can't afford a $1,000 expense

Most Americans are poorer and dumber than they think. I am not surprised at all that so many find $1000 dollars to be hard to come up with. *

Saving money is dumb in the U.S., I agree. You make no interest. Every 10 dollars you save will be worth 9 dollars next year, and that is assuming no POOM event that increases that decline rate.

And, yes, if you get sick, you will be wiped out.

Savings should be in gold that nobody knows about.

* 130 Million Americans work. Many of those jobs probably are not "living wages". That leaves at 170 million Americans who SHOULD have a hard time coming up with $1000 dollars. Maybe the article is all about nothing?

[BK]

Re: Most Americans can't afford a $1,000 expense

Over consumption is part of the problem.. But, the average guy or gal really had the cards stacked against them for 10-15 years.

The Government sponsors and supports the FIRE industry products like the 401K and the 529 plan. Most middle class families were regularly contributing to both these schemes and often with no good investment option. Then the last 4 Presidential Administration do everything possible to get everyone to own a home and for a while it appears like the folks who opt for the biggest homes make the most in home equity. Mix in an education system that doesn't provide any education on how the American economy works and the power of compounding or what is money.

Next thing the average middle class family finds their 401K has dropped in value , the 529 plan has lost money, their home equity is gone, and one person in the household loses a full-time job. The emergency fund vanishes very quickly if you have to pay $1000 or more for Cobra for a year or longer and you have half the income coming in. Vanishing emergency, no work, no relief in site, does stopping at 7-11 or Taco bell really break the bank.

Then your Town raises your property taxes and many have seen their property taxes double in ten years. Every thing that a family consumes regularly has increased by two fold in the last 10-15 years.

The Middle class and lower classes were overwhelmed by Federal Bureaucrats and FIRE industry - Sympathy and empathy are so important when considering the crisis many families and Americans find them selves in.

[lektrode]

Re: Most Americans can't afford a $1,000 expense

cant argue with any of this, its all quite evident from what eye see.
but it isnt so much the fact that someone lost a job or their savings went up in smoke in one of the market blowouts, as it is their sloppy/lackadaisical and spendthift ways (7-11 x 5times/week = paying way too much for items that they'd be better off buying in larger qty at a supermarket), never mind the big tickets like more car than they need/can afford, the latest 'lektronic gizmos, spending too much at restaurants when they get a bit of overtime or feel 'they deserve it' when they splurge on wanton consumption, rather than saving for the inevitable rainy day.

and we all know LOTS of people who had done just exactly that from 2001 on and who are now dangling by a thread/1paycheck away from default.... hell, my income has fallen by more than 50% and i'm hanging on _only_ because i spent _way_ less than i could have during the boom (and _still_ drive my 20y/o chevy)

the point is: them thats broke/defaulting today are almost always the ones who spend too much when things are 'good'

Over consumption is part of the problem.. But, the average guy or gal really had the cards stacked against them for 10-15 years.

The Government sponsors and supports the FIRE industry products like the 401K and the 529 plan. Most middle class families were regularly contributing to both these schemes and often with no good investment option. Then the last 4 Presidential Administration do everything possible to get everyone to own a home and for a while it appears like the folks who opt for the biggest homes make the most in home equity. Mix in an education system that doesn't provide any education on how the American economy works and the power of compounding or what is money.

Next thing the average middle class family finds their 401K has dropped in value , the 529 plan has lost money, their home equity is gone, and one person in the household loses a full-time job. The emergency fund vanishes very quickly if you have to pay $1000 or more for Cobra for a year or longer and you have half the income coming in. Vanishing emergency, no work, no relief in site, does stopping at 7-11 or Taco bell really break the bank.

Then your Town raises your property taxes and many have seen their property taxes double in ten years. Every thing that a family consumes regularly has increased by two fold in the last 10-15 years.

The Middle class and lower classes were overwhelmed by Federal Bureaucrats and FIRE industry - Sympathy and empathy are so important when considering the crisis many families and Americans find them selves in.

[BK]

Re: Most Americans can't afford a $1,000 expense

lektrode -
I agree with you ....its just many thought they were doing the right thing..... everything was a need, I learned as a child in a family with lots of children to get by with less - fix things that are broke and get another ten years out of them...wear my hiking boots until the soles come off and then I get the boots resoled.

Media and the Government and FIRE Industry are a powerful force that most people in our society were over whelmed by.... itulip readers tend to be non-herders.

[Starving Steve]

Re: Most Americans can't afford a $1,000 expense

"Sympathy and empathy" for those who piss-away money on new trucks, toys, lottery tickets, beer, booze, bars, cigarettes, trips to Vegas, and fast food? What am I missing here?

When I was in the coin business for a few years down in Colorado Springs, I used to loan money on post-dated cheques. The first post-date was $80 for $50 cash on the spot. After a couple of these cheques, I would loan them $50 cash for a $60 post-date. Rather quickly, I got to know who was good for the cash and who wasn't. So my biz became $60 for $50, over and over again.

I would talk with the individuals and ask them why they didn't just go to an ATM or a bank and withdraw cash? And the answer was that they would have done so if they had cash in the bank, but they wouldn't have cash until pay-day. So, Starving Steve was their ATM so that they could go out on Friday night and Saturday night and have fun drinking.

I kid you not! Fun was more important to them than the cost of a post-date, and they would tell me this outright. Fun was more important to them than money.

I would take two or three such post-dates per week from the bar-hoppers. They loved me!

Fort Carson (Army) cheques were almost never good. So, I refused to take Ft. Carson cheques because I had a drawer full of "NSF", or "Account closed. Moved," or "Three stars for three debit attempts, NSF", or Three balls for three debit attempts, NSF". The good cheques were Canadian Forces at the NORAD air-base in Colo. Spgs, also U.S. Air Force at NORAD, and also the Air Force Academy cheques were always good.

The only good Army cheques to take were warrant officer cheques, but rarely did warrant officers come in for a post-date service.

I would drive around Colo. Spgs. just before bank closing time and on the day of automatic deposit of pay to military personel from the government, and I would deposit the cheques so that at midnight of the pay-day, my cheques would be paid and would clear.... That was the game.

The few hundred dollars that I made doing post-dates barely covered my gas and my time. Fun it was! But profitable, it was not. Nevertheless, the military loved me. To them, I provided a great service, and they did not value money as much as good times.

Most Americans do not have $1000 in cash or $1000 in the bank because they do not value money. And you can tell them that 80/50 is 60%, or 60/50 is 20%, and they don't care. They comprehend the English, but they don't care. Fun and good times are what they care about, and money is just a mechanism ( a tool ) for them.

Ever try to convince a dog or a cat about the value of money? I would show my cat that coins bought cat food. My cat would never make the connexion between coins and food. So, in cat world, in dog world, and in the world of most people, what money buys is more important than what money is.

My cat would try to please me by accepting my coins, tasting them, and then batting them around the floor with its paws. And that was it. Similarly, for most people, coins are something to throw into a fountain, drop onto the floor, or maybe to drop into a slot machine in Las Vegas.

Beautiful beaver nickels with beavers chewing on their logs, or gleaming old silver coins, it's all meaningless to most people.

[lektrode]

Re: Most Americans can't afford a $1,000 expense

....itulip readers tend to be non-herders.

and i'll drink to that!

[lektrode]

Re: Most Americans can't afford a $1,000 expense

...Saving money is dumb in the U.S., I agree. You make no interest. Every 10 dollars you save will be worth 9 dollars next year
...

with the criminals that ran all 3 branchs of the .gov (right into the toilet) immed after the biggest meltdown in US history, what else could be expected.


they/we will be lucky if their 'constituents' - at least the ones that dont occupy lower manhattan - arent rioting in the streets by xmas...

[BK]

Re: Most Americans can't afford a $1,000 expense

Starving Steve,
Most people aren't very bright - most people don't value money because they never learned the value of it. Doesn't everyone remember the mantra of Financial planners in the late 1990s and early 2000s - "make sure you have a HELOC in case of job loss and you'll have the cash you need" - financial insanity was the rule of the day.
This kind of idiotic information passed for expert advice. Most people born since 1970 think that Car loans are always available - and you never need to save for a car.
People never question the 'status quo" until its all changed.
Regards

[c1ue]

Re: Most Americans can't afford a $1,000 expense

When I was in the coin business for a few years down in Colorado Springs, I used to loan money on post-dated cheques. The first post-date was $80 for $50 cash on the spot. After a couple of these cheques, I would loan them $50 cash for a $60 post-date. Rather quickly, I got to know who was good for the cash and who wasn't. So my biz became $60 for $50, over and over again.

You do realize, of course, that what you were doing is illegal.

There is a reason why this type of thing should be regulated.

[tim916]

Re: Most Americans can't afford a $1,000 expense

Consumption is not the problem nor the point he was making, tim. Overconsumption (living beyond one's means) is the problem as is mal-consumption (buying cigarettes instead of paying insurance premiums) , both of which contribute to no savings; immediately or eventually.

But reduced consumption is the problem isn't it? My point is that if all these people were to really clamp down and stop spending money wouldn't there be a significant ripple effect? Wouldn't unemployment get much worse, especially for low-level jobs?

[A. Hamilton]

Re: Most Americans can't afford a $1,000 expense

Antone who participates in the Main Street economy can attest to this.

I'm a lawyer, and may of the garden-variety matters that my firm might handle, such as drunk driving defense, other misdemeanor criminal cases, divorce & custody, etc., either carry flat fees in the $1,000-2,000 range, or require an initial deposit of that amount against which hourly charges are billed.

Many people facing these problems are down on their luck, so to speak, but pre-2008, they could usually either find a relative or friend to front the money, or just put it on a credit card (we accept them). Not long after the 2008 "crash," I noticed that people not only didn't have money, they couldn't beg, borrow or steal it, either. I remember one lady who was struggling to pay for representation for her juvenile delinquent teen; this poor woman had to spread the $1,250 fee out among 9 credit/debit cards.

2009 and 2010 were awful years for this sort of "retail law;" if it weren't for my personal injury practice, I'd have starved. In 2011, things have been somewhat better, but the market is much more price-sensitive than before, and the credit card trade is still in the crapper.

I read the most amazing statistic recently, the attribution for which I can't quite remember: If you skim off the top 15% of the population, what's left of the U.S. has a lower median income than Slovenia. Looking at my town, I believe it; the formerly solid working and lower-middle classes have gradually morphed into a lumpenproletariat, a veritable rabble. It wouldn't be a shock to me that a greater proportion of Slovenians than Americans can get their hands on $1,000 pronto.

[Starving Steve]

Re: Most Americans can't afford a $1,000 expense

A service charge to cash a post-date is not illegal. And even as I said, the profit from this venture did not amount to a hill of beans. ( It was a few hundred dollars. )

One dark evening I sat with an IRS money-laundering auditor. He drove down to audit me from Denver. He thought I was making a fortune cashing cheques. So I showed him my drawer full of bounced cheques, and then he began to understand the business. Post-date cheque-cashing was a joke. I showed him the profits from my coin business during the years when gold and silver were dirt cheap, and he began to see (comprehend) the picture of how hopeless the coin business was at that time. ( And it was hopeless! )

The auditor asked me why I stayed in business, and I told him the sad truth: Ten or twenty thousand dollars per year was better than unemployment. And the $10K/yr. or $20K/yr. paid for groceries, utilities, and gas, plus it allowed us to save an old silver dollar every now and then. I worked-out our monthly expenses to run the junk car that I bought for $300, and I showed him that our home was in clear title. So the auditor began to comprehend how it was possible to live--- and actually live a decent lifestyle in respectable poverty.

Needless to say, I have no sympathy for deadbeats. One can live well and even raise a family if one is frugal and careful.
It takes thinking, creating your own job, budgeting, and care, but it can be done.

[Slimprofits]

Re: Most Americans can't afford a $1,000 expense

I read the most amazing statistic recently, the attribution for which I can't quite remember: If you skim off the top 15% of the population, what's left of the U.S. has a lower median income than Slovenia. Looking at my town, I believe it; the formerly solid working and lower-middle classes have gradually morphed into a lumpenproletariat, a veritable rabble. It wouldn't be a shock to me that a greater proportion of Slovenians than Americans can get their hands on $1,000 pronto.

it's from here:

http://gonzalolira.blogspot.com/2011...s-were-in.html

It’s not merely that the disparity between the wealthy and the rest of the population is obscene—the disparity skews the results. Remove the top 15% of the population, and the average income in the United States drops below Slovenia’s—and no, I’m not kidding.

The author was asked for clarification and a source, but provided neither.